Three important technology strategies for banks in 2018

Ensuring the direct and total connection between technology and business outcomes

In my last blog about making banking more personal, I said there’s no quick and ready route to transformation. I doubt that anybody in the banking business would disagree with that; particularly larger banks, or the banking operations of major retailers.

Digital transformation is about, among other things, bringing innovative customer propositions rapidly to market. The cloud plays a critical role in this process, offering an environment where development can be undertaken rapidly, particularly when framed by a DevOps approach.

There can be a relatively quick way of assessing where a bank needs to focus its efforts and investment in its technology development programmes, and its operations, to start moving in the right direction. I’d suggest that the direction is in becoming more agile, gearing the organisation to change, frequent reassessment of its offerings, and the practice of accepting false starts as an inherent building block in arriving at true innovation

Many banks are already long embarked on their transformation journeys. They’re reducing costs creatively rather than negatively, and de-risking their operations with either significant or micro-focused technology make-overs. They’re responding to customer mobility, the new customer freedoms placing a strain on creating a loyal customer base, and at the top of this hierarchy, customer-centricity. Established UK banks have rolled out more than 23 million banking apps to their account bases.


Creating an agile operation; is about having the ability to grasp opportunities as they arise, and deal with compliance without it being a strain on resources. Three strategies to move towards greater agility are modern systems and architecture design (infrastructure modernisation), optimising the use of cloud resources (cloud native apps), and creating a framework for faster progress (DevOps).

  • Infrastructure modernisation to support innovation

Modernising the infrastructure means creating the right framework and capabilities to develop applications and services that can evolve, iteratively. This is perhaps one of the biggest mind-set changes for banks to make. The sector has traditionally been nervous of failure, a restraint to innovation that has been roundly ignored by FinTechs.

The tools exist to bring the infrastructure bang up to date with seemingly no huge amount of effort; from virtualisation technologies to cloud computing, to server solid state drives, and software defined compute, storage and network.

Modernisation boils down to one key strategy: moving operations out of the data centre. Larger kit becomes smaller kit. So small does it become that it eventually casts off all physical manifestations of itself; it gets virtualised. As it does so, it points towards greater use of the cloud.

Keep the best of what you have

A note of reassurance can be attached to any modernisation strategy: time-honoured kit does not have to get thrown out with the bathwater. As technology continues to evolve, every new generation is more powerful, smaller and smarter than the one before it. The fear of instantly losing all the benefit of investment in legacy infrastructure, however, is unfounded.

New and old, as in any sensitively balanced ecosystem, can happily co-exist to the enrichment of both. While old kit may lack dynamism, and happily be excluded from any ‘agile’ discussion, much still has a valuable role to perform. Tapes, for example, will still contain data. Since you need to retain the data you need to keep the tapes, and thus you need to keep the drives.

The efficiencies to be gained from modernisation can be enormous. Old practices meant that each project would have a server dedicated to it. Often these servers run at single digit utilisation. With greater agility in the datacentre many of these servers are not needed but often cannot simply be tossed away. The approach here would be to optimise the use of equipment if the business cannot afford to discard it. Servers can be amalgamated and alternative uses found for servers that fulfil no operational role; such uses as disaster recovery and back up.

  • Cloud native apps to speed up time to market

Before the cloud we still had apps. They were developed on premise and stayed on premise. They took time and effort to develop, test, implement. They were the heavy-hitters of business processes. Many applications can still be developed in-house for fixed infrastructures, in the ‘traditional’ way.They still take time and effort, however. It takes longer to get them out there doing their job

Bringing the cloud into your business brings in the core attributes of agility; rapid scalability (up or down) lower costs, and speed of development. Cloud is an important element in driving the agile bank because it offers a range of tools, and open source languages. Applications can be developed and tested in the cloud. AWS and Azure both offer trusted cloud environments with vast resources associated with them. Azure presents “open source technologies like Kubernetes, modernise applications using serverless computing with Azure Functions, and use AI and data to infuse intelligence into your solutions.” AWS provides “…can help you move faster, operate more securely, and save substantial costs”. At DXC we work for over 800 managed cloud clients and have 20,000 Microsoft certified professionals and 1000 AWS professionals on our global team.

  • DevOps to drive dynamic competitive advantage

Regardless of a modernised infrastructure and/or a mature cloud utilisation strategy, if the application development teams and the operations teams can’t meet in the middle, then progress remains a distant goal.

App-dev teams are driven by speed and innovation; constantly moving forward and with little fear of the consequences of failure. Better to try and fail fast, they believe, than to stagnate in the development phase until no doubt exists anywhere that the app will work. Operations teams seek stability, reliability and availability. Put them together, and the result can be friction. In the middle of these two clashing approaches lies the optimum way forward: DevOps.

Focus on business outcomes

All banks today are looking inwards at how they do things now, to enable themselves to look outwards with more focus on their customers’ needs and more precision in addressing them. Anyone working in the technology part of a bank should have a full understanding of business goals and pressures. Anyone on the operations side should likewise have holistic visibility. Business managers need to be able to understand the capabilities that technology can bring; the agility it facilitates. Collaboration gets things done, isolation holds them up.

Focus on business outcomes: the goal of innovation

Technology change, refresh, or update for its own sake is not an advisable strategy, even if it may seem imperative to shake things up to demonstrate to shareholders that the bank is keeping up with the times. Targeted change, with a focus on business outcomes, where systems are streamlined and updated because users need them so and customers want them so, is the order of the day in banking.

The consultants, Bain & Company, state that:

Risk is no reason to delay progress, if it were we would all still be convinced that the world was a flat disc. Stringent regulatory compliance is likewise not a reason to hold back. Regulators just want to protect the public, they don’t want to damage businesses. I hope the three strategies I’ve discussed here help you gain more customer focus in the year ahead, and I really do believe the key to meaningful innovation is in hunkering down and just doing it, frequently, fast, and fearlessly.